Families have to proceed cautiously with auto insurance matters affecting young adults, especially considering how expensive coverage can cost for these higher-risk drivers. One related question many policyholders have is: Should I take my insured child off my auto insurance policy when he or she is away at college?
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In the following paragraphs we will walk you through the consequences and considerations for both options. In summary:
Keep Them on the Policy
|Take Them off the Policy|
|If||The student will be driving regularly at college, or is commuting / attending a school nearby||Living on campus with no regular access to a car|
|Considerations||The higher cost of having a student under the age of 25 on your policy||The possibility of lacking coverage when she drives an uninsured car or a friend's car without consent|
Keep Your Student on Your Policy If:
If (a) your student plans to bring a vehicle to college and use it; or (b) if she is commuting to or attending a nearby school that allows her to come home more often and use the car, then you should keep he or she on the policy. Whether she plans to drive or not while attending college, many experts suggest keeping your child active and listed on your policy because the student will be:
Covered if/when she:
- Returns home and needs to drive
- Drives a friend’s automobile while away
- Is forced to drive due to an emergency
- Safeguarded if she’s struck by a car while on foot or on a bike or as a passenger in another person’s vehicle.
Earning family premium deductions (if eligible), including:
- A good student insurance discount (typically, a “B” average or better is required). “This option can possibly save you a couple hundred bucks or more,” says Bob Passmore, assistance vice president of personal lines for the Property Casualty Insurers Association of America.
- A distant student discount (in general, attending school full-time at least 100 miles away and under 23-years-old is required), which can save families hundreds of dollars more, Passmore says.
And last but not least, your child will be building a record of uninterrupted insurance coverage, which can possibly reduce premiums when it’s time for her to obtain her own policy; In fact, some insurers will reject applicants with no previous history of continuous coverage.If your student will remain on your policy, here are a few things you need to keep in mind:
- Inform your insurer of your child’s school status, but indicate your home as her primary address; students who attend college full-time, even out of state, can typically retain coverage on their parents’ policy if the parents’ residence is their primary address.
- Ask your insurer if it can assign your child to the least valuable vehicle you own, which can help decrease premiums.
- Stress safe and responsible driving habits, including abiding by rules outlined in the policy, no driving while texting or under the influence of alcohol or drugs, and no lending of the car to a friend.
Take Your Student off Your Policy If:
If she will not be taking an auto to school—especially if she’ll be living on campus and not visiting home often, then it may be better off for you to take your child off your policy. This can possibly decrease your rates by $1,000 to $2,500 annually, depending on your student’s age and driving record, says Ron Hettler, president of the Hettler Insurance Agency in Lubbock, Texas.
“However, be aware that many carriers will not allow you to even temporarily exclude a licensed driver in your household who is already listed on the policy,” says Hettler.
If your student is allowed to be excluded from the policy, our suggestions are:
- Remember to contact your insurer to add her back to the policy prior to coming home if she plans to drive while home, such as during winter or summer breaks.
- Discourage her from driving a friend’s car while away at school; the friend’s insurance should provide primary coverage for your student if she were to be involved in an accident or moving violation. But the friend’s auto policy may lacks adequate coverage to safeguard your student and anyone else involved in an accident that she causes.
Kristofer Kirchen, president of Tampa, Fla.-based Advanced Insurance Managers, LLC, says students should get their own separate policy if they permanently live elsewhere (not in their parents’ home), particularly if their new ZIP code yields lower rates, and if they have a vehicle titled in their own name.
“The biggest things that come into play are residence, ownership, and usage of the car. If the parents still have an interest in the car, I would recommend it stays on the parents’ policy,” says Kirchen.
To determine which option is best for you, consult with your insurance representative as soon as possible and review your coverage choices carefully.
For more information, read our primer on the best insurance for teens.